The UK’s small businesses were quick to condemn chancellor Gordon Brown for his decision to raise the small firms’ corporation tax rate in today’s Budget.
While larger firms were relieved to hear that the headline corporation tax rate would be cut from 30% to 28%, small businesses were highly critical of Brown’s decision to increase the small firms’ corporation tax rate from 19% to 22% in 2009.
Brown explained that the rise in the rate of corporation tax on small businesses was to reduce the tax difference between those who are self-employed and small companies.
The Forum of Private Business (FPB) slammed the decision, criticising Brown for his delivery of ‘a political budget that will deliver nothing for small business or enterprise.’
“The reduction in the main rate of Corporation Tax will benefit larger firms, not the smaller businesses that make up the majority of the private sector,” said Nick Goulding, chief executive of the FPB.
“The changes made for smaller firms will serve only to further burden them,” he added.
Richard Garrod, partner at consultancy firm Mazars, believes that small and medium-sized businesses may want to revisit their structure.
“It may be increasingly tax effective to consider adopting an LLP structure, certainly from set up this would need serious consideration.
“Overall it appears that small businesses have been hit where it hurts, in the pocket, and that they are paying to help subsidise Brown’s headline tax cuts.”
© Crimson Business Ltd. 2007
